Newton's laws of business(!)

Transactions are fundamental to the universe. There is always a give and take transaction happening everywhere around us between every single entity in the universe - whether living or nonliving. And there is energy involved in each and every transaction however trivial it may be. When such exchanges happen between people through a medium of money, it assumes the form of business. The business deal becomes the transaction and the money becomes the energy. And like energy cannot be created or destroyed, money cannot be created or destroyed too. Similar to energy, it simply changes forms, hands and keeps flowing. It is never stable. It is rather amazing how almost all laws of science can be applied to business and vice versa.

To illustrate this point let us consider the case of Newton’s 3 laws of motion - arguably the most fundamental laws of physics.

Newton’s First Law : In the simplest of terms, Newton’s 1st law of motion says that a body at rest or in motion will continue in that state unless acted upon by an external force. This simply means that you need to apply force to change the state of motion of any object.

In business too, unless some force is applied, the status quo will remain. For example, you have people working in an enterprise and delivering a regular level of performance. By imparting an additional impetus through structured performance-based incentives or skill development training the performance level changes. This is true for front line salespeople, back-office administrative people and even for the executive management. The external force applied through effective well-crafted training, or through a measurable performance index based incentive, changes the direction or the efficiency or both for an organization.

Newton’s Second Law :The total force ‘F’ acting on an object is equal to the mass ‘m’ of the object multiplied by its acceleration‘a’ (F = m x a.) In other words, for a given mass, the force applied is directly proportional to the acceleration or vice versa. The object will register a change in motion when the force is applied. The quantum of the change is directly proportional to the force.

Now, In business for ushering any change in the organizational motion, a force needs to be applied as explained in the 1st law. The change is in direct proportion to the effort, time and money invested in the business. For example, if you are working on accelerating the market pull towards your products or brand, the acceleration that you would achieve will always be proportional to the effort, time and money invested. You run a half-hearted marketing campaign or you abandon a campaign midway or are stingy on the budget, the results will only be mediocre if at all there are any. And please note that the time factor always has an exponential effect.

It is important to note that in physics, some amount of force is always spent on overcoming inertia and friction before the object sets in motion. Once the motion starts, it gathers pace exponentially, since acceleration is an exponential entity. Similarly, in business, the initial investment of effort, time and money will be used up in breaking the comfort barriers and resistance to change of your people and the market. Thereafter it will be a ‘snowball effect’. Sustained investment is required to achieve anything worthwhile.

Newton’s Third Law : When one body exerts a force on a second body, the second body simultaneously exerts a force equal in magnitude and opposite in direction on the first body. In other words, every action has an equal and opposite reaction.

In business, this is all the more important. Every positive action will have a positive reaction from the other side and every negative action will result in a negative reaction from the other side. On the other side of the table, you may have your business network peers, customers, vendors, financers, media, your own staff, competitors or any other entity in your universe. Your actions will be reciprocated in equal measure. You treat a vendor badly, you get a bad buying experience. You treat your staff with care and empathy, they will go out of the way for you. You respect your competitors and they will respect you. You work selflessly for your business network peers and they will do the same for you.

The only difference I have found with this law in physics and business is that while the reaction in physics is exactly equal, in business it is a magnified one! But that is where, I guess, we get out of classical physics and step in the realm of quantum physics where everything works in exponents!

D.B.Prabhu(The author is an alumnus of IIM Bangalore, Engineering graduate and has a Post Graduation in Public Policy and Management. He has published several research papers on environmental entrepreneurship, corporate performance management and economics. He is an entrepreneur and business mentor especially for environmental and technology-driven businesses.)